A- Challenges and opportunities of Vietnam in the current social- economic context and global financial crisis and economic recession.
- Challenges in guaranteeing macroeconomic stability: One of the successes of Vietnam in 2008 was to maintain macroeconomic stability in the context of inflation, exchange rates, payment balances, reserves… However, the macroeconomic stability still faces risks as the following:
+ Firstly: trade deficit is likely to increase at a high level. Exports in the coming months will face difficulties due to narrowed markets. Meanwhile stimulus measures begin going into effect, implementing capitals of enterprises will be increased which lead to increasingly import demands.
+ Secondly, inflation risk still exists: Although the consumption price index went down sharply in the last months of 2008, the CPI began to increase in the first two months of 2009.
+ Thirdly, payment balance deficit is possible to happen due to decreased exports, increased imports; as well as the disbursement of the FDI projectsis very low.
+ Fourthly, budget deficit could be at a high rate, the budget revenues will be reduced sharply due to production and business go down and raw oil prices decrease dramatically.
+ Fifthly, risks for the financial and banking systems in Vietnam are considered low because they are not under directly from the global financial crisis. However, in the worst case, those banks that have chapter capitals under VND 1,000 billions must be merged into big banks,…
-Challenges in preventing economic recessions
At the time being, Viet Nam is putting forward to implement stimulus measures for investment and consumption as tax cut, supporting interest rates forenterprises, supporting laborers who lose jobs,… to promote production-business, consumption, preventing economic recession. However, these measures just are implemented in the short time, so that it’s needed to wait for some more time to assess their effectiveness.
-Challenges in maintaining economic growth
Vietnam proposed the economic growth plan for 2009 with the rate 6.5%, meanwhile almost other forecasts give lower figures. Most recently, IMF forecasts the growth rate of Vietnam in this year is 4.75%.
The fact shows that, to reach the economic growth target 2009 is very difficult. Recently, the GDP growth was officially lowered at the rate 5%.
- Challenges in guaranteeing social security
The economic difficulties result in many social problems, especially the increasing unemployment rate. According to the statistics, there are about 80.000 laborers in the enterprises lose their jobs; and in 2009, these figures forecasted are 400,000.
Creating jobs and income for the laborers is big challenge for the economy. Some policies to support the poor are implementing slowly with much confusion.
- Challenges in implementing the reform, creating preconditions for sustainable growth in the mid-term and long- term.
There are many weaknesses of the Vietnam economy as the following:
+economic growth in the last years mainly based on the wide side. This current growth model is not suitable;
+the current development model depends heavily on the state owned enterprises.
+ the economy depends heavily on the external markets and capitals.
+ Investment structure in the last years focused strongly on industries and services meanwhile investment for agriculture is not reasonable,…
Intertwined into above challenges is opportunities for the development, in which there are great chances to change growth model.
- The endowment advantages of the economy: such as political stability, social safety, favor geographical location, abundant natural resources, a market with more than 86 millions,…
- Opportunities from Viet Nam experiences in dealing with the crisis: looking back the last time, it can be confirmed that the Vietnam economy has overcome a lot of difficulties and open new development chances.
- Opportunities from the understanding on internal weaknesses of the economy.
- Opportunities for Vietnam enterprises.
b- Solutions to help Vietnam overcome challenges
- Preventing unemployment, creating jobs and incomes for the laborers
The unemploymentin Vietnam is a hot topic at the time being. The number of laborers who lose jobs is very large. At present, the common phenomena is that the unemployees come back to the villages from cities.
- Supporting farmers, the poor, vulnerable groups
In the context of financial crisis and economic recession, the life of above people groups is so difficult because they suffer most from the affect of the crisis. Therefore, the support to these people is so urgent. The government has issues many policies to assist them.
- Supporting the small and medium enterprises
In the last time, the government has implementing many measures to support the small and medium enterprises, especially thedemand stimulus packages to support interest rates. However, the enterprises get difficulties to access these priorities.
- Improving effectiveness of the demand stimulus measures
To prevent the economic recession, maintaining growth and guaranteeing social securities, the government has issued many measures to stimulate demands for the economy. The implementation for this policy in the last time is assessed as the first success to bring into play the effectiveness.
- Improving the guiding and executing works for the economy to overcome challenges
This task requires the most effort of all government levels from centralto local ones. It is needed to have a close cooperation among production, export and domestic consumption businesses to share responbilities, experiences, and risks.
C- Solutions to take advantages from current time
- Short term solutions
- Focusing on exploiting the domestic market
- Strengthening to attract FDI
- Furthering exports
-Medium and long term solutions
- Restructuring the economy
-Renovating the social-economic institution system
- Improving the effectiveness and efficiency of the guidance and executing work for the economy.